We reported last week that not even lavish holiday spending could save fourth-quarter gross domestic product numbers. Well, it seems that the lure of Christmas shopping couldn’t prompt consumers to whip out their wallets and rev up the United States economy.
The Department of Commerce reported Monday that consumer spending fell to its lowest level since 2009 because of a very weak December. Consumption fell 0.3 percent after climbing 0.5 percent in the month of November.
It was the biggest decline since Sept. 2009 and suggested large dips in spending on durable and non-durable goods.
Economists did forecast a 0.2 percent dip, but they also noted that American consumers performed much of their Christmas shopping in November and the mild weather allowed consumers to save on utilities.
Overall, consumption soared 4.3 percent in the final quarter of 2014. About two-thirds of the U.S. economy depends on consumer spending.
When looking at the specific data points, personal income jumped 0.3 percent for the second consecutive month. Household disposal income also inched 0.5 percent higher. Amid falling gasoline prices and rising incomes, the national savings rate increased to 4.9 percent, up from 4.3 percent in the previous month.
Inflation remains subdued, says the Commerce Department, and this is helping consumers stretch their paychecks. For the second straight month, prices for goods and services remained unchanged.
Analysts argue that we should be seeing stronger income gains and consumption levels because of a rebounding labor market and a growing number of well-paying jobs. With tumbling gas prices and income boosts, consumers are using much of their extra cash to pay down their astronomical debt levels and put some money aside for retirement.
However, the holiday debt hangover is still prevalent. The numbers for Christmas debt should be released soon, and they contribute to the winter blues that this time of the year is well-known for.
